Australia’s leading retail executives, including Coles boss Ian McLeod and Myer chief Bernie Brookes, discuss the future of Australian retail at The Australian Financial Review and Macquarie Group’s Future Forum: Retail, boom or doom?

2.10pm: And Ahmed has just wrapped up the discussion on behalf of The Australian Financial Review team, with Financial Review Group CEO and publisher Brett Clegg stepping in to offer a final thanks to our panellists.

He says he has genuine empathy for another structurally challenged industry.

The crowd is looking forward to some more positive notes in Perth in August, when Rio Tinto’s Tom Albanese and Ian Smith from Orica will be joining a panel on the resources industry.

2.04pm: Customers should be happy but Brookes says shareholders will also start to feel the benefits of a proliferation in online sales once they reach a critical mass.

The cost base for bricks and mortar stores is comprised of 8 per cent rent and 20 per cent wages.

In online, those figures are 2 per cent and 8 per cent respectively, meaning once the volume gets to about 5 per cent it becomes highly profitable.

2.00pm: More good news for online shoppers who would rather be in the store, with Brookes saying cosmetics will have to start matching pricing on international shelves. Parity is just around the corner, he says.

Morphet agrees the online opportunity is in range, not price.

1.57pm: Ahmed says: There’s a big challenge when it comes to the question of where to invest marketing and advertising spend.

Bad news for traditional sources, says Brookes, with Myer putting more emphasis on going direct to its loyalty customers.

Household incomes might be the elephant in the room, says our questioner.

Morphet says people are managing their spending more closely, meaning retailers have to work harder to get what spending is left.

Brookes agrees that people are frightened of what’s happening in the global economy. But picking the right Sass n Bide dress is more important than ever because the right products will still sell.

McLeod’s imperative is all around offering value and cheaper prices, which he says is why Coles is getting more customers than ever.

Greenberg says frugal is the new cool and that means more customers are chasing value online.

1.49pm: McLeod is glad his idea to get Skippy the Bush Kangaroo on board for the advertising campaign eventually lost out to the big red hand!

But he can’t resist a quick promo: Most of those are spending it during the stocktake sale that is currently on at Myer at the moment ... Don’t think the ABC will be covering a Financial Review event again ...

1.44pm: McLeod says the cost challenges, from energy to carbon to wages, just mean they have to work harder to drive efficiencies.

While Brookes is looking at shutting stores to save on spiralling costs, McLeod says Coles is pushing to open more stores and for longer.

Have the panellists changed their shopping habits?

McLeod is no longer picking up a paperback at the airport before his holidays, he’s downloading an e-book.

Morphet says she does search online for information. She likes relationship shopping and supports her local independent retailer. Her independent butcher actually gives her a glass of wine on a Saturday morning.

There’s an idea to take back to Coles, Ian McLeod!

Brookes jokes he only buys what he can’t find at Myer online.

1.38pm: Back from lunch. Ahmed begins questions from the floor as the panellists return to the stage.

What is keeping everyone awake at night?

Coles boss McLeod says you’ve just got to take it as it comes.

“Retail is a competitive industry and you either thrive on that or worry about it,” he says. No one is in any doubt which camp McLeod sits in.

Brookes says everything comes back to looking after staff, shareholders and customers and that constant challenge is becoming harder.

“You get a lot of feedback. It’s become more dynamic, faster,” he says.

But the share price?

Brookes doesn’t answer, but justifies the $25 million investment as helping staff and customers even if it might hurt shareholders.

Greenberg says he sleeps well when he turns off the lights.

1.17pm: Lunch has arrived just as the diminutive Ahmed is offered a position as full forward at the St Kilda Football Club. Her height clearly makes her an attractive target up forward.

It’s a choice of fish or beef and when we come back there will be questions from the floor.

1.15pm: McLeod says his pay cut is in line with his firm belief that value for money has to come from the top.

1.13pm: At Coles, the first five years has been about reconfiguring the business but the next will be about revamping stores and developing online.

“The next two to three years us going to make the difference,” says McLeod.

Greater engagement and interaction with customers over next few years will be key.

But watch out if you were in charge of posting Ahmed her new Flybuys card. It hasn’t arrived and McLeod says that guy won’t be around for much longer. Everyone laughs at his joke.

1.09pm: The ACCC’s Rod Sims says competition is “soft” with only two main players. But McLeod says Costco and Aldi’s arrival is boosting competition.

Rod Sims, head of the ACCC, says competition is soft with only two players.

Photo: Josh Robenstone

1.07pm: Coles boss Ian McLeod joins the panel. Ahmed recalls talking to McLeod about the appalling state of Coles supermarkets four years ago, when he first signed on to the role at Wesfarmers.

McLeod says no Coles suppliers want to be his friend on Facebook.

Neither is ACCC chairman Rod Sims, Ahmed quips.

Ian McLeod, Coles chief executive, is on the panel.

Photo: Nic Walker

1.02pm: At a European forum he has just returned from, the starting slide was: Offline retailers cannibalising online retailers. Everyone has a good laugh. “We are here really to protect Australian retail,” Greenberg says. He thinks we’re up for a “big fight” against offshore despite perceptions that it’s online versus shop fronts. Paul calls upon Morphet and Brookes to join the call to arms and protect the segment of the economy.

12.59pm: Ahmed says Greenberg is in the “sweet spot” of retail at the moment but he says retail still isn’t all plain sailing.

Postage authorities such as Australia Post, he says, seem to advantage offshore retailers. Being an economic rationalist and living on the North Shore in Sydney, Greenberg jokes he has lost half his friends around the weekend BBQ by supporting the NBN. “You have to accept a certain level of wastage,” he says.

Nabila gets straight to the pointy end of questioning with Dealsdirect’s Paul Greenberg. How many Facebook friends does he have?

Unfortunately, Greenberg says, not as many as Morphet at Bonds.

12.56pm: Bonds has 750,000 friends on Facebook but Bernie Brookes only has two. Even Morphet isn’t sure why they have that many, but she suspects the Bonds Baby Search competition might have helped.

12.50pm: Morphet says middle retailers and middle brands have gone from the market. “What’s happening with the big retailers is that they’re turning their stores into brand and the big guns like ours are putting their resources behind their brand. The most important thing is that the brands have to be relevant.”

Sue Morphet chief executive of Pacific Brands says store interaction means Bonds can better gauge the customer’s appetite for each of its products.

Photo: Glenn Hunt

12.47pm: Ahmed is introducing Sue Morphet, who has just opened the first Bonds store at Melbourne’s Doncaster shopping town.

Morphett says opening the Bonds store means Pacific Brands is able to meet customer needs better, after complaints that it is difficult to find the full range of Bonds in a single store.

It’s been a big development for the iconic Australian brand in a short space of time. “We’ve gone from being a wholesaler for a hundred years to moving online and to retail over the last few months,” Morphet tells the forum. “The store interaction means Bonds can better gauge the customer’s appetite for each of its products.”

12.43pm: Good news for online shoppers disappointed by Australian retailers’ websites. Brookes says the Myer website is near completion, with the amount of products stocked online growing from 4000 to 15,000 in the past month

12.40pm: Between 3 and 5 per cent cost impost between now and 2013 because of changes to the retail award, he says. We see the internet not as a threat to us, but an enormous opportunity if we embrace it.

12.39pm: Brookes says the retail industry is focusing on what it can control during the structural change, to deliver the best returns for shareholders.

Growth in online is taking sales that were expected in store, but Brookes says Myer needs to focus on delivering great service over a multitude of networks. “Whatever the customer wants, our job is just to deliver it to them.”

Using overseas department stores as a benchmark, where Brookes says online sales make up 8 to 15 per cent of their business, Myer expects above 10 per cent online.

12.35pm: Companies and markets editor Nabila Ahmed, who has had a long career covering retail for The Age, the Australian and The Australian Financial Review, begins.

Ahmed is introducing Myer boss Bernie Brookes, who also started on the retail floor, however as a trolley boy at Woolworths. Nabila is asking the tough questions. She wants to know if there is any good news out there in retail land.

12.30pm: Forum gets under way: Robin Bishop, executive director, head of Macquarie Capital, Australia and New Zealand, says he is pleased everyone could make it.